Hello Tutor,
Standard says, " the board are aware that the definition of a business can be difficult and judgemental to apply. As such there is a concentration test......"
"The concentration test is met ( i.e. the acquired assets are not a business) if substantially all of the fair value of the total assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets."
Could be please explain this concentration test in easy words?
Thank you.
Ask the Tutor ACCA SBR
IFRS 3, Concentration test.
3y ago#1Please don't quote standard numbers on exam - inevitably you will quote the wrong one :)
I buy a company. The company owns a building and nothing else. No activity is being carried on in the building. There are no staff.
Question - in substance have I bought a company or a a building.
Answer - I have bought a building. So I will show IP as an asset instead of an investment in my own FS.
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